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Business Economy

MSP Hike for kharif crops unlikely to be inflationary: SBI

MSP Hike for kharif crops unlikely to be inflationary: SBI

New Delhi, June 7 (UNI) Hike in minimum support price (MSP) for Kharif crops is unlikely to be inflationary as any impact on inflation is directly proportional to procurement, a SBI Research report has said.

The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi on Wednesday approved MSP for all mandated Kharif crops for marketing season 2023-24 to ensure remunerative prices to the growers for their produce and to encourage crop diversification.

The increase in MSP for various crops such as paddy, groundnut, moong, ragi, jowar, bajra is in the range of 5-11%.

"Interestingly, this increase is unlikely to be inflationary as any impact on inflation is directly proportional to procurement. While procurement of cereals is primarily in the realm of wheat and rice, the procurement of pulses by NAFED is not much," SBI Research report said.

The report said that the role of MSPs in influencing the inflation trajectory in India has been an issue of intense academic and public policy debate.

"While empirical findings are mixed, the actual impact of the MSP hike would depend on the procurement strategy of the Government as well as the ruling market prices of various crops vis-à-vis the revised MSPs," it said.

The report recommended that MSP should be converted to Floor Price of Auction on e-NAM so that growers of crops like maize, ragi, moong are also benefitted.

Briefing the media on Cabinet decisions taken during the day, Commerce and Industry Minister Piyush Goyal said that the maximum increase in MSP has been approved in case of Moong dal.

The MSP for Moong dal for Kharif marketing season 2023-24 has been raised by 10.4% to Rs 8,558 per quintal.

Goyal noted that production of pulses in the last four years has increased by about 25% while in case of oilseeds the increase has been to the extent of 30%.

In case of groundnut, the MSP has been raised by 9% for the Kharif marketing season. The MSP for sesamum seed has been raised by 10.3% to Rs 8,635 per quintal.

At Rs 2,183 per quintal MSP for paddy (common) has been raised by 7%. Paddy-Grade A MSP has been fixed at Rs 2,203 per quintal.


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